Spain’s tax reform, bad deal for small savers

The reduction of pension tax deduction (from €10,000 to €8,000) is also controversia, widely criticized by insurance association Unespa, although we cannot say it harms small savers. Government is right when stating that this measure affects few tax payers since the average contribution to pension plans solely adds up to €1,500 a year. Besides, a plan has been devised to foster medium and long term saving.

Another issue is the abolition of the dividend tax exemption. Fiscal reform reduced savings tax in all brackets. Taxes go 2 points down for saving under €6,000; 4 points for €6,000-€24,000; 6 points for €24,000 to €50,000 and 4 points for over €50,000.

The truth is savers who get €1,500 gross benefit from share are currently paying nothing for it thanks to fiscal deduction. In 2015 this income won’t be taxed by €300, up to €1,200 and in 2016 by €285, up to €1,215. Investors with lower profitability will be under similar fiscal pressure.